Rising rates are starting to put more upward pressure on inventory levels as more and more protentional buyers are forced from the market place, according to the latest data from Altos Research.
- There are 561,000 single family homes available unsold on the market. That’s up just under 1% for the third week in a row.
- Immediate sales, the of the pandemic, have fallen to just 12,000 down from the 2022 peak of 31,000 back in April.
5.5% Threshold. Mike Simonsen, CEO of Altos, argues that 5.5% might be a threshold for buyers. “This corresponded with mortgage rates being close to 5% for August. So it looks to me like 5.5% is the big threshold for buyers. I’m going to keep an eye on that threshold. If rates are in the 7% range when we start next year, that’s going to wreak havoc on any forecasts we’ve been thinking about.”
Home Prices. Home prices fell just under 1.0% for the week which was the second weekly decrease in a row. Mike Simonsen now argues that home prices should end the year around 410,000. This would be a 9.1% drop from the $451,000 high reported in July.
- If home prices end the year at $410k that would represent a 12.3% increase from the end of 2021.
BOTTOM LINE: Inventory continues to crawl upward but this is 100% because of buyer demand dropping instead of new sellers looking to profit before home prices fall.